Special Feature
One size does not fit all Exploring diversity within the UK landlord community
Paresh Raja Chief Executive Officer MFS
H
ow many landlords are there in the UK? It is a question that appears to be simple – but in fact generates a multitude of answers.
HMRC data from July 2021 shows how many people derive income from property, according to their Self Assessment tax return. The number was 2.65 million which is a huge figure, encompassing some 31,380 landlords in Barnet, 27,060 in Birmingham, 1,070 in Clackmanshire, and a small collection of 190 on the Isles of Scilly. The publication of the data, and the noise it created served as a timely reminder of the breadth and variety of people that make up the UK’s landlord community. As a lender, the creation and delivery of financial products must start with the fundamental understanding that each client is different; not just in their financial circumstances – how much they want to borrow, for what asset and for how long – but also in their motivations and attitudes.
Rental income versus repayments In most instances, the viability of a buy-to-let loan will be determined by the relationship between the rental income a property generates and the cost of the loan. Known as the interest cover ratio (ICR) it is often enough to rule out many prospective borrowers. For instance, if the ICR is 145% and the monthly mortgage repayments are £1,000, the property must achieve a rental income of at least £1,450.
